Preparing inventory purchases budgets with different assumptions Rachel Khan has been at odds with

Preparing inventory purchases budgets with different assumptions

Rachel Khan has been at odds with her brother and business partner, David, since childhood. The sibling rivalry is not all bad, however; their garden shop, Khan Gardens and Gifts, has been very successful. When the partners met to prepare the coming year’s budget, their forecasts were different, naturally. Their sales revenue estimates follow.

Source of Estimate

Rachel

First Quarter

$360,000

Second Quarter

$400,000

Third Quarter

$300,000

Fourth Quarter

$420,000

David

300,000

320,000

340,000

480,000

Past experience indicates that cost of goods sold is about 60 percent of sales revenue. The company tries to maintain 15 percent of the next quarter’s expected cost of goods sold as the current quarter’s ending inventory. The ending inventory this year is $25,000. Next year’s ending inventory is budgeted to be $35,000.

Related Questions in Managerial Accounting - Others

1. A budget is being prepared for the first and second quarters of 19B for Aggarwal Retail Stores, Inc. The balance sheet as of December 31, 19A, is given below. AGGARWAL RETAIL STORES, INC. Balance Sheet December 31, 19A ASSETS Cash $ 65,000 Accounts Receivable 52

was purchased 5 years ago at a cost of $150,000 and is being depreciated over its useful life of 10 years at which point it is estimated to have a residual trade in value of $10,000. The existing truck has 5 years of usable life remaining and can currently be sold for $62,000 net.The new long haul...

Exercise 9-34 Sales Budget Refer to the information regarding Stillwater Designs above. Required: 1. Prepare a sales budget for each quarter of 2014 and for the year in total. Show sales by product and in total for each time period. 2. CONCEPTUAL CONNECTION How

., for a cost of $35 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: Per Unit 14,400 Units per year Direct materials $9 $129

Answer Preview :

Troy Engines, Ltd. Requirement 1: (a) What will be the total relevant cost of 14,400 units, if they are manufactured internally? (Omit the "$" sign in your response.) Total relevant cost...

Answer one paragraph only for each question and all the answers in one word file and make sure no plagiarism1- Are than any other reasons other than cost as to why an organization would choose to outsource cost? 2-Do you think that outsourcing is ne
Posted
3 days ago

Some companies have created controversy over the decision to outsource major activities to companies based in other countries. The decision to outsource should begin with an analysis of the relevant costs.What is your opinion of outsourcing?Should o
Posted
5 days ago

Harrison Company makes two products and uses a conventional costing system in which a single plantwide, predetermined overhead rate is computed based on direct labour-hours. These products are customized to some degree for specific customers. Data f
Posted
6 days ago

Harrison Company makes two products and uses a conventional costing system in which a single plantwide, predetermined overhead rate is computed based on direct labour-hours. These products are customized to some degree for specific customers. Data f
Posted
6 days ago

Financial Statement Analysis ProjectThe financial statement analysis project is due Thursday, November 15th by midnight via Canvas email. It will not be accepted late for any reason but you can submit it early.Project InstructionsStudents should rea
Posted
6 days ago

Some companies have created controversy over the decision to outsource major activities to companies based in other countries. The decision to outsource should begin with an analysis of the relevant costs. · oWhat is your opinion of outsourcing? oSh
Posted
8 days ago

An unfavorable variable overhead spending variance may be caused bya. the payment of lower prices for variable overhead items used. b. the use of excessive quantities of the variable overhead allocation base. c. the use of excessive quantities of va
Posted
9 days ago

Morton Ltd had on issue $5,000,000 10% unsecurednotes at 30 June 2011. Following agood year, the company had surplus cash at its disposal. On 31 March 2012 it took the opportunity tore-purchase $3,000,000 of its unsecured notes at a price of $103 fo
Posted
13 days ago

Financial Statement Analysis ProjectThe financial statement analysis project is due Thursday, November 15th by midnight via Canvas email. It will not be accepted late for any reason but you can submit it early.Project InstructionsStudents should rea
Posted
15 days ago